Federal Court of Australia

Vasudevn, in the matter of Harbour Guidance Pty Ltd (Administrators Appointed) [2025] FCA 486

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to s 439A(6) of the Corporations Act 2001 (Cth) (Act) the period in which the First Plaintiff (Administrators) must convene the second meeting of the creditors of the Second Plaintiff (Company) under s 439A(1) of the Act is extended up to and including 30 June 2025.

2.    Pursuant to s 447A(1) of the Act, Part 5.3A of the Act is to operate such that the second meeting of creditors required by s 439A(1) in respect of the administration of the Company may be held at any time during, or within five business days after the end of, the convening period as extended by Order 1, notwithstanding the operation of s 439A(2) of the Act.

3.    By 5:00pm on Monday, 5 May 2025, the Administrators give notice to all known creditors (including persons claiming to be creditors) of the Company of these orders by means of:

(a)    a circular posted on any website maintained by the Administrators;

(b)    sending such information electronically to the email addresses of the creditors for whom the Administrators have an email address; and

(c)    sending such information to the postal address or facsimile number, or otherwise as provided for by the Act or the Insolvency Practice Rules (Corporations) 2016 (Cth), to creditors in respect of whom the Administrators do not have an email address.

4.    Liberty be granted to:

(a)    the Administrators to apply to the Court for any further extensions or variations of the convening period under Order 1 above any time before that time expires; and

(b)    any creditor or any person who is otherwise affected by these orders who can demonstrate sufficient interest to make an application to vary or discharge these Orders no later than three business days prior to the last day of the convening period as extended by Order 1 of these orders.

5.    The costs of and incidental to this application be costs and expenses in the administration of the Company.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

(REVISED FROM TRANSCRIPT)

WHEATLEY J:

INTRODUCTION

1    The originating application seeks to extend the convening period of the second meeting of creditors. The application relies on s 439A(6) of the Corporations Act 2001 (Cth) (the Act). Further, the Plaintiffs, being the voluntary administrators, seek what is commonly known as a Daisytek order, following the decision in Re Daisytek Australia Pty Ltd (2003) 45 ACSR 446; [2003] FCA 575 (Daisytek). The voluntary administrators seek approximately an additional two months, within which to convene the second meeting of creditors, being until 30 June 2025. This is the first extension sought in this administration.

2    Section 439A(1) of the Act requires administrators of a company under administration to convene a second meeting of the company’s creditors within the convening period as fixed by s 439A(5) or as extended under s 439A(6).

3    For the reasons given below, I am satisfied that the convening period should be extended. On the basis of the evidence filed in support of this application, I am also persuaded that it is appropriate to extend the period for the convening period until 30 June 2025.

BACKGROUND

4    The voluntary administrators, Mr David Vasudevan, Mr Andrew Yeo and Mr Lindsay Bainbridge, were appointed to Harbour Guidance Pty Ltd ACN 621 504 096 (Company) as joint and several administrators (Administrators) on 26 March 2025, pursuant to s 436A of the Act. The convening period has been referred in the supporting affidavit of the administrator Mr Vasudevan as ending on 2 May 2025. Mr Vasudevan provides that affidavit on behalf of all of the Administrators. In submissions, counsel for the Administrators has submitted and helpfully taken the Court to the relevant provisions for the calculation of the convening period and submitted that it is more appropriately calculated as 5 May 2025. I accept that submission, and the relevant convening date does appear to end on 5 May 2025. In any event, this application is brought within the convening period.

5    The Company was registered on 5 September 2017 and currently operates a retail business selling denim and other clothing products under the trading name “Jeanswest”. The Company is a wholly owned subsidiary of Harbour Guidance No. 1 Pty Ltd. Harbour Guidance No. 1 is a wholly owned subsidiary of Harbour Guide Limited, a company incorporated in Hong Kong.

LEGAL PRINCIPLES

6    The principles to be applied and the circumstances in which the Court will extend a convening period are well established. I gratefully adopt the observations of Cheeseman J in Freeman, in the matter of Regional Express Holdings Limited (administrators appointed) (No 2) [2024] FCA 968 at [33] to [40]:

33    The principles applicable in relation to when the Court will extend the convening period for the second meeting of creditors pursuant to s 439A(6) of the Act are well established. In making such an order, the Court must reach an appropriate balance between an expectation that the administration will be relatively speedy and summary and the countervailing factor that undue speed should not be allowed to prejudice sensible and constructive actions directed to maximising a return for creditors: Mann v Abruzzi Sports Club Ltd (1994) 12 ACSR 611; Re Diamond Press Australia Pty Ltd [2001] NSWSC 313 at [10]. See also Strawbridge, in the matter of Virgin Australia Holdings Ltd (administrators appointed) (No 2) [2020] FCA 717; 144 ACSR 347 at [64]-[68], Crawford, in the matter of North Queensland Heavy Haulage Services Pty Ltd (Administrators Appointed) [2017] FCA 635 at [18]-[20] and Walker, in the matter of Plumbfirst Pty Ltd (Administrators Appointed) [2023] FCA 441 at [16].

34    It is clear that the Court should not allow longer than is required for the diligent exercise of the powers of the administrator. It may be appropriate to grant an extension in circumstances where:

(a)    there is a proper evidentiary case for the extension;

(b)    there is no evidence of material prejudice to those affected by the moratorium during the continued period of administration; and

(c)    the length of the extension sought by the administrator is exposed as having a reasonable basis.

35    In exercising the discretion to extend the convening period the Court will generally afford significant weight to the view of the administrator as to the needs and circumstances of the particular company in considering whether it is appropriate to grant an extension having regard to the objects of Pt 5.3A: Wight, in the matter of Responsible Entity Services Ltd (Administrators Appointed) [2024] FCA 458 at [36], [38] (and the authorities cited therein).

36    The particular circumstances in which an extension may be granted include, where the size and scope of the business is substantial, where the extension will allow a sale of the business as a going concern, and more generally, where additional time is likely to enhance the return for unsecured creditors: Farnsworth v About Life Pty Limited (Administrator Appointed), in the matter of About Life Pty Limited (Administrator Appointed) [2019] FCA 11 at [3]-[8]; In the matter of Kavia Holdings Pty Limited (administrators appointed) (receivers and managers appointed) [2013] NSWSC 737 at [15]; Silvia, in the matter of Austcorp Group Limited (Administrators Appointed) [2009] FCA 636 at [18]; Metha, in the matter of Hans Continental Smallgoods Pty Ltd (Administrators Appointed) [2008] FCA 1933 at [20].

37    An extension of the administration period to facilitate either (or both) of: (a) the sale of the business of the company as a going concern, so as to maximise the value of the company’s assets; or (b) the progression and assessment of a deed of company arrangement (DOCA) proposal that may provide a better return to creditors than a winding up, are well-recognised examples where the court has extended the convening period: Virgin (No 2) at [66]; Bonza Aviation Pty Ltd (Administrators Appointed) [2024] FCA 575 at [12].

38    An additional factor in favour of extending the convening period is the need for creditors to have sufficient information at the second meeting to allow them to exercise their decision as to the future of the company in as informed a manner as possible: Re Foodora Australia Pty Ltd (Administrators Appointed) [2018] NSWSC 1426 at [11]; Hill, in the matter of Autocare Services Pty Ltd (administrators appointed) [2021] FCA 167 at [28].

39    The interests of creditors who are affected by the statutory moratorium are relevant, but are not decisive: Chamberlain, in the matter of South Wagga Sports and Bowling Club Ltd (Administrator Appointed) [2009] FCA 25 at [9]; ABC Learning Centres Limited, in the matter of ABC Learning Centres Limited; application by Walker (No. 8) (2009) 73 ACSR 478 at [52]-[53]; Re South Burnett Wines (2004) 52 ACSR 298 at [14] (Campbell J, as his Honour then was)).

40    Ultimately, it is necessary to consider the best interests of the creditors as a whole, having regard to the purpose of Part 5.3A of the Act.

[emphasis in original]

7    To those observations, I would add from Austin J in Re Riviera Group Pty Ltd (administrators appointed) (receivers and managers appointed) (2009) 72 ACSR 352; [2009] NSWSC 585 at [13], wherein Austin J identified the following categories of cases in which extensions had been granted:

13    The reasons given for an extension in subsequent cases can be grouped into the following broad categories:

•    the size and scope of the business: Lombe, Re Babcock & Brown Ltd (Administrators Appointed) [2009] FCA 349; Worrell; Re Storm Financial Ltd (Receivers and Managers Appointed) [2009] FCA 70; ABC Learning Centres Ltd, in the matter of ABC Learning Centres Ltd; application by Walker (No 5) [2008] FCA 1947;

•    substantial offshore activities: Lehman Bros Australia Ltd [2008] NSWSC 1132;

•    large number of employees with complex entitlements: Re S & D International Pty Ltd (in liq); Malhotra v Tiwari [2005] VSC 496; Re Ansett Australia & Ors (All Admin Appointed) and Korda and Anor (As Administrators) [2002] FCA 90;

•    complex corporate group structure and intercompany loans: Lombe, Re Babcock & Brown Ltd (Administrators Appointed) [2009] FCA 349; Re Octaviar Limited (Administrators Appointed) (Receivers and Managers Appointed (ACN 107 863 436) [2008] QSC 272; In the matter of LED Builders Pty Ltd (Administrators Appointed); LED Builders Pty Ltd (Administrators Appointed) and Ors [2008] NSWSC 633; Hall, in the matter of Australian Capital Reserve Limited (Administrators Appointed) [2007] FCA 1328;

•    complex transactions entered into by the company (e.g. securities lending or derivatives transactions): In the matter of Lift Capital Partners Ltd (Administrators Appointed) [2008] NSWSC 446;

•    complex prospects of recovery proceedings: Worrel, Re Storm Financial Ltd (Receivers and Managers Appointed) [2009] FCA 70; Deputy Commissioner of Taxation v Wellnora Pty Limited [2007] FCA 1324 ;

•    lack of access to corporate financial records: Sims, in the matter of Destra Corporation Ltd [2008] FCA 2002; Fincorp Group Holdings Pty Ltd & Ors [2007] NSWSC 363;

•    the time needed to execute an orderly process of disposal of assets: Carter, in the matter of SFM Australasia Pty Ltd (Administrators Appointed) ACN 105 317 333 (No 2) [2009] FCA 419; ABC Learning Centres Ltd, in the matter of ABC Learning Centres Ltd; application by Walker (No 7) [2009] FCA 454;

•    the time needed for thorough assessment of a proposal for a deed of company arrangement: Silvia, in the matter of Austcorp Group Ltd (Administrators Appointed) [2009] FCA 636;

•    where the extension will allow sale of the business as a going concern: Lombe Re Australian Discount Retail Pty Ltd [2009] NSWSC 110; Stewart, in the matter of Kleins Franchising Pty Ltd (Administrators Appointed) (ACN 007 348 236) [2008] FCA 721; Uni-Aire Security Pty Ltd (Administrators Appointed) ACN 085 430 619, in the matter of Uni-Aire Security Pty Ltd (Administrators Appointed) ACN 085 430 619 [2006] FCA 1423;

•    more generally, that additional time is likely to enhance the return for unsecured creditors: Deputy Commissioner of Taxation v Scottsdale Homes No 3 Pty Ltd (No 2) [2009] FCA 190; Fitzgerald, in the matter of Primebroker Securities Limited (Administrator Appointed) (Receivers and Managers Appointed) [2008] FCA 1247; Ex parte Vouris; in the matter of Marrickville Bowling and Recreation Club Ltd (under Administration) [2008] DCA 622.

8    I have also had regard to and adopt, the observations of Thawley J in Farnsworth v About Life Pty Ltd (Administrators Appointed), in the matter of About Life Pty Ltd (administrators appointed) [2019] FCA 11 at [3] to [7] and those of Middleton J in Strawbridge, in the matter of Virgin Australia Holdings Ltd (administrators appointed) (No 2) (2020) 144 ACSR 347; [2020] FCA 717 at [66] to [68]. All of those authorities, of course, are relevant and helpful in understanding the relevant circumstances in which the Court may extend the relevant convening period. Finally, to all of these observations, I would also include that of Barrett J in Lombe re Australian Discount Retail (2009) 27 ACLC 115; [2009] NSWSC 110 at [21]:

21    The second meeting of creditors is best held at a time when it is possible to give creditors fairly definitive financial information that will assist them in this decision making. In the present case, information about the financial consequences of a sale of the business is crucial, assuming such a sale eventuates. In addition, creditors' decision-making will be much more difficult and more complicated if they are compelled to make a decision about the company’s future based on speculation about the possibility of a going-concern sale. Further time for the formulation and digestion of recommendations based on established realities will avoid the possibility of what might be a premature decision in favour of winding up as the only practically available option.

9    Ultimately, it is necessary to consider the best interests of the creditors as a whole, having regard to the purpose of Pt 5.3A of the Act. To this exposition of the relevant principles, given the terms of the orders sought by the Administrators in this case, should be added the principles as explained by Lindgren J in Daisytek at [10] to [17]. A Daisytek order allows administrators to hold the second meeting of creditors prior to the expiration of the extended convening period if desirable, so as to avoid requiring administrators having to wait until the end of the convening period in circumstances where they may be in a position to hold the meeting earlier. Such an order has been described nowadays as commonplace.

CONSIDERATION

10    The first meeting of creditors was held on 4 April 2025. The Administrators have provided the minutes of that first meeting. No committee of inspection was appointed. At that first meeting of creditors, amongst other matters, creditors were advised of the intention to make this application for an extension of the convening period to allow a proper sale campaign to be completed. Mr Vasudevan explained that extending the convening period would assist in any proponent to formulate a deed of company arrangement. Again, amongst other matters, the Administrators also provided the meeting attendees with details regarding the Company’s operations, financial details, structure and relationship to related entities in Hong Kong, Australia and New Zealand. Relevantly, the only question at the first meeting which was asked of the Administrators, as recorded in those minutes of meeting, was regarding staff communication and the management team. No questions or queries were raised concerning the proposed extension to the convening period.

11    The Administrators consider that they require this additional period of approximately two months before convening the second meeting of creditors.

12    Although it is possible to find authorities in similar types of matters or different matters which have granted such or even longer extensions, each case, of course, must turn on its own facts. The particular circumstances of each administration must be considered with regard to the principles outlined above to ascertain whether it is appropriate in the balancing exercise to extend the convening period. In the context of considering an application to extend the convening period, the objects of Pt 5.3A, as set out in s 435A, must be kept in mind; that is:

… to provide for the business, property and affairs of an insolvent company to be administered in a way that:

(a)    maximises the chances of the company, or as much as possible of its business, continuing in existence; or

(b)    if it is not possible for the company or its business to continue in existence - results in a better return for the company’s creditors and members than would result from an immediate winding up of the company.

Note:    Schedule 2 contains additional rules about companies under external administration.

13    Furthermore, the appropriate balancing is as between the expectation that an administration will be undertaken in a relatively speedy and summary manner, with the need to ensure that the administration is not concluded without consideration of sensible and constructive options directed towards maximising the return for creditors and any return for shareholders.

14    At the time of the appointment, the Administrators record that the Company had over 600 employees on a full-time, part-time and casual basis, staffed in the following categories: front line retail, management, distribution centre staff and head office staff, including governance, merchandising, marketing, human resources and information technology staff (together, the Workforce).

15    The Company also traded from 87 physical retail stores in Victoria, New South Wales, Tasmania, Queensland and the Australian Capital Territory (Retail Stores). It operated a distribution centre from Moorabbin Airport in Victoria (Distribution Centre). It also operated a support centre from Hawthorn, Victoria (Support Centre). The Company also operated an online retail platform.

16    The Administrators, in order to seek to preserve the value of the Company’s business as a going concern, have continued to trade the business. This has been by way of the existing Workforce and the relevant infrastructure of the business, including the Retail Stores, Distribution Centre and Support Centre. Those premises, from which the Company is operating, are leased.

17    Mr Vasudevan, on behalf of the Administrators, deposes that current and non-current liabilities pursuant to those leases are in the amount of $25,960,000. These are currently being treated as contingent liabilities. The Administrators have engaged the Company’s former leasing agent, GM Retail, for the purposes of assisting with communications with the landlords, their agents and/or representatives of the leased properties, coordinating the progressive closures of the Retail Stores and assessing claims from landlords for rent and outgoings in relation to the leased properties.

18    The leasing exposure and issues are significant. In terms of its size and scope in the administration, the consideration of this number of retail stores, including across the various states, obviously increases the complexity.

19    In terms of secured creditors of the Company, the Administrators have provided a search of the Personal Property and Securities Register, which identifies 13 registered securities. That includes a security granted to Harbour Guide over all present and after acquired property of the Company (with no exceptions).

20    Further to this, the Administrators have received a proof of debt from Harbour Guide, which claims a secured debt of $25,390,896.

21    In terms of unsecured creditors, as at the date of the affidavit provided in support of this application, the Administrators, having considered the books and records of the Company, which records that there is approximately $1,463,545 in unrelated unsecured creditors and approximately $20,852,665 in related party unsecured creditors.

22    The number and quantum of the creditors overall adds to the complexity of this administration. However, having made those observations, it should be noted that the Administrators have not yet adjudicated on the proofs of debt lodged by the unsecured creditors. In the circumstances of what has been undertaken to date by the Administrators and the number of unsecured creditors, I do not make that observation in any sense by way of criticism. It is a recognition of the complexity of the Administration, which supports the grant of an extension to the convening period.

23    On or about 26 March 2025, being the day of their appointment, the Administrators engaged Gordon Brothers to undertake a sales campaign to sell the Company’s inventory via its existing online platform and retail stores (Inventory Sale). The Administrators describe Gordon Brothers as a retail inventory clearance specialist with an international footprint. Their key services include inventory management and control, strategic inventory sales and augmentation, and managed property exits.

24    The Inventory Sale process commenced on 1 April 2025 and, although initially scheduled for eight weeks, it was altered to a seven-week campaign, due to the success that it has had in the first few weeks. At the time of providing the affidavit in support of this application, the Inventory Sale is stated to be in week four, and has produced more than $10.4 million in net sales, which has equated to approximately 75% of the Company’s inventory.

25    The directors of the Company provided the Administrators with the report on company activities and property on 23 April 2025 pursuant to s 438B(2) of the Act. That is, just over a week ago.

26    In terms of the Workforce, at the date of providing the affidavit in support, the Administrators observe that a total of 21 staff members working in the company’s head office, and the managing director, have been made redundant. A total of 244 staff have been notified of their termination and the requirement to continue to work out the notice period. Furthermore, the Administrators have estimated outstanding employee liabilities in a total of almost $4.15 million. I will not outline the detail those amounts in terms of long service leave, annual leave, or the like. It is sufficient to note that that is a significant amount, and not unexpected given the number of employees across the business. The Administrators observe that those amounts, in relation to the estimated outstanding employee liabilities will almost certainly change, depending on when employees take leave and/or depart from employment.

27    In relation to the Company’s intellectual property, the Administrators have had several parties express an interest in purchasing the Company’s brand, goodwill and customer database. Some of those parties have also indicated that they may be interested in retaining some stores as part of this process. As a result, the Administrators have commenced an expression of interest campaign for the sale of the Company’s intellectual property. The campaign is expected to run for about three weeks and will end around 20 May 2025. After which, the Administrators will prepare a shortlist of candidates to be given the opportunity to conduct due diligence and submit offers for consideration. A successful result to this sale campaign in relation to the Company’s intellectual property will potentially provide a better return for creditors.

28    From the date of the Administrators’ appointment, as is clear from the summary of matters raised in the first meeting, the Administrators have conducted extensive investigations into the business, property, affairs and financial circumstances of the Company, in accordance with their obligations under s 438A of the Act. The Administrators seek to continue their investigations and the processes presently in train, being the Inventory Sale and intellectual property sales, amongst other matters, for realisation of the Company’s assets.

29    The purpose of the second meeting of creditors by s 439A, as required by s 439C, is for the creditors to consider the Company and its future. At that meeting, the creditors may resolve that the Company execute a deed of company arrangement, that the administration should come to an end or that the Company should be wound up.

30    To assist the creditors to make this decision at the second meeting of creditors, the Administrators must complete and provide a report to creditors. That report, pursuant to s 75-225(3) of the Insolvency Practice Rules (Corporations) 2016 (Cth), must provide information about the Company, its business, property, affairs and financial circumstances, as well as setting out certain statements as required by that rule. In addition to that rule is s 438A of the Act, which requires the Administrators to form an opinion about whether it would be in the interests of creditors of the Company to execute a deed of company arrangement, for the administration to end, or for the Company to be wound up. The Administrators state that they have not yet formed a view about an appropriate outcome for the Company.

31    Based on the principles set out above, significant weight ought to be given to the Administrator’s view of the needs and circumstances of the particular company in considering the extension request. In this regard, I make the following observations regarding the evidence and opinion of the Administrators. The Company operates a large and complex retail business with branding, products and goodwill that appears to retain value in the Australian market. For these reasons, the Administrators are obligated to ensure that the value of the Company’s assets are retained and realised in an orderly, efficient and productive manner. The Administrators have retained suitable experts and third parties to achieve those outcomes for the benefit of the creditors of the Company. The engagement of Gordon Brothers and GM Retail are examples of such experts engaged by the Administrators.

32    Furthermore, the Administrators have not received a proposed deed of company arrangement. During the administration, initial discussions have taken place with the managing director, Mr Yeung. He has indicated to the Administrators that there is an intention to put forward a proposal, however, any proposal of a deed of company arrangement can only be put forward once the outcome of the Inventory Sale and the sale of the Company’s intellectual property is known. That is not an unreasonable position. Those processes have not yet concluded and, as such, any proposed deed of company arrangement from this particular proponent has not yet been forthcoming. The Administrators consider that it is in the best interests of the creditors of the Company for the Administrators to complete the Inventory Sale, the Retail Store closures, deal with the Company’s intellectual property and complete their further investigations into the Company’s financial circumstances prior to preparing their report to creditors pursuant to s 75-255 of the Insolvency Practice Rules (Corporations).

33    It will be necessary for these matters to be concluded before the Administrators can properly engage with the matters required of them under the Act and complete their report to creditors. The completion of those processes will, according to the Administrators, and which I accept, allow the Administrators to consider:

(a)    the true value of the Company’s assets and liabilities after the orderly winding down of its business and the sale of all of the Company’s inventory and non-essential assets;

(b)    any deed of company arrangement proposal that may be received; and

(c)    any transactions of the Company that appear to be, in the Administrators’ opinion, voidable transactions.

34    The Administrators’ investigations into potential claims that would be available to the Company or a liquidator under Pt 5.7B are in their very early stages. The ongoing and immediate focus of the Administrators has been on maintaining the Company’s operations, dedicating resources to the preservation of the Company’s assets and facilitating the orderly continuation of trade and management of the 87 physical Retail Stores, the hundreds of employees and the Inventory Sale.

35    The Administrators are currently unable to provide an accurate and fully informed opinion to the Company’s creditors, as they will be required to do at the second meeting of creditors, on whether any proposal for a deed of company arrangement is in the creditors’ interests, having regard to the following factors:

(1)    the benefits that might be available to the creditors in a liquidation of the company;

(2)    whether the administration should end; and/or

(3)    whether the company should be wound up in insolvency.

36    The Administrators cannot identify any prejudice. In this regard, the uncertainty of the position of the employees and the potential delay, if the Company is wound up, to any potential claim to the Fair Entitlements Guarantee scheme, might be such prejudice. However, in considering this issue, I accept the submission made that there is no material prejudice to the remaining employees of the Company by granting the extension sought.

37    I have given significant weight to the opinion of the Administrators in the balancing exercise. In this regard, it can be observed that the Administrators informed the creditors at the first meeting, which was held shortly after their appointment, that an extension would always be required. That is, it was apparent from very early on in this matter that it would be complex in size and scope.

38    The statutory context requires that extensions should generally be brief. Extensions are not to be granted where doing so would undermine that statutory object of a quick and summary consideration of alternatives. This must be balanced (as is described in the principles outlined above) with a consideration of sensible and constructive alternatives towards maximising the return for creditors and, potentially, any return for shareholders, as to whether it is appropriate to grant an extension.

39    I am satisfied that in all of the circumstances of this matter, it is appropriate to extend the convening period and I am persuaded that it is appropriate to extend it for the period requested, that is, until 30 June 2025. That is because, firstly, having regard to the matters identified by Austin J in Re Riviera Group, being considerations of the size and scope of the business, whether there is a complex corporate structure, whether there is any inter-company loans, and whether there are complex transactions, the size and scope of the Company’s business, which is under administration in this matter, is both substantial and complex. As explained in detail above, the Company operated from 87 physical Retail Stores across four states and one territory, plus it operated a Distribution Centre, a Support Centre and an online outlet. It had over 600 employees employed on various bases. It has, with the assistance of external experts, engaged in a process to try and reduce its liabilities and consider the Company’s leasing position.

40    Secondly, the Administrators require an extension for the purpose of conducting a comprehensive sale campaign of the Company’s assets, dealing with interested parties, and then to transact that sale of the Company’s assets. The Inventory Sale, and the sale of the intellectual property, also fall into this consideration. The value of the Company’s assets and the return to creditors is likely to be maximised if each of these sale campaigns is allowed to be conducted appropriately, and if each of those sale campaigns are successful.

41    The Inventory Sale has thus far resulted in net proceeds of more than $10 million and the seven weeks period to run that process is reasonable. It is worth observing that the initial period of eight weeks was reduced due to its success. That shows the flexible way that the Administrators are approaching the administration. It also shows that the Administrators are willing to reduce time periods where it is appropriate to do so. Similarly, in relation to the intellectual property, the time and approach to such matters is reasonable, and likely to result in a better outcome for creditors.

42    Thirdly, once the sales campaigns have been completed, an extension will allow the Administrators to explore a proposal for a deed of company arrangement. As was observed, Mr Yeung has indicated that he will not put forward such a proposal until those sale campaigns have been concluded. Again, that is a sensible and reasonable approach, as it is only once those processes have been completed that a proper understanding of the Company’s position will be ascertained. The sales campaigns must conclude for the Administrators to be able to finalise their report to creditors. The Administrators are not presently able to conclude their report or to express the opinion required of them as to the recommendation for the Company, that being to either enter into a deed of company arrangement, for the administration to end or for the company to be wound up.

43    Fourthly, the Administrators require an extension of the convening period so the Administrators can continue their ongoing investigations and consideration of employee liabilities, secured creditors’ claims, report on company affairs as provided by the directors, review unsecured creditors’ claims and any voidable transactions. The quantum of unrelated unsecured creditors (outlined above) relates to 79 creditors. The related party unsecured creditors (outlined above) relates to two creditors, which totals 81 creditors. There is more work to be done in this regard, noting that the Administrators have not yet ruled on any of the proofs of debt which have been provided.

44    Fifthly, and finally, there is no apparent material prejudice, and there was no opposition identified from creditors at the first meeting of creditors.

45    It may also be that the Administrators are able to call the second meeting earlier. As already observed, the flexible approach, which was adopted in relation to the Inventory Sales, suggests that if the Administrators were in such a position to call the second meeting earlier, they would do so. As such, it is appropriate for the Administrators to be afforded flexibility in this way in relation to the timing of the meeting: see Silvia, in the matter of Austcorp Group Limited (Administrators Appointed) [2009] FCA 636 at [18]. I am satisfied it is appropriate to make a Daisytek order in the circumstances of this case. Such orders have been described now as “sensible and almost routine”: In the matter of LED Builders Pty Ltd (Administrators Appointed) [2008] NSWSC 633 at [2], referred to in Byrnes, in the matter of Murray River Organics Proprietary Limited (Administrators Appointed) (Receivers and Managers Appointed) [2022] FCA 232 at [33].

46    Therefore, I am content to make orders to extend the convening period, including with a Daisytek order.

Associate:    

Dated:    14 May 2025